MERIDEN — The city closed out fiscal year 2017-18 with a $2.6 million deficit after savings from city departments couldn’t make up for revenue shortfalls.
In order to balance the budget, funds will likely be reduced from the city’s reserve fund, which currently sits at $18.3 million.
The city adopted a $194.5 million spending plan last year but had to wait several months for the state to adopt its budget, which left many unknowns in state funding.
The budget overestimated several key revenue sources, according to Finance Director Michael Lupkas. Shortfalls in state funding included $640,000 less than anticipated in Special Education funds, another $524,000 from the the Municipal Revenue Sharing grant, $403,000 for payments in lieu of taxes for properties exempt from local property taxes, and roughly $456,000 in reimbursed exemptions.
The city also received $237,000 less than expected from building department fees. In total, revenues fell short by $2.9 million. However, expenses were under budget by about $322,000, Lupkas said, bringing the deficit down to $2.6 million.
Departments attempted to mitigate the deficit by forgoing projects and finding ways to bring down expenses, said acting City Manager Ken Morgan.
“We did as much as we could do on our end,” Morgan said. “Virtually every department came in the black. There are very few exceptions to that and the exceptions were minimal.”
The Finance Committee voted against offsetting the deficit by delaying a $200,000 post-employment benefits payment.
City financial policies aim to keep reserves at 8.33 percent of the budget, or about $16.8 million, Lupkas said. While $18.3 million is in the city’s reserve account, $1.5 million has been earmarked for other projects, leaving $16.8 million.
If the city uses reserves to balance last year’s budget, $14.2 million will remain and it would take about three years to build the fund back up to $16.8 million, Lupkas said.